Why Is Collusion Illegal In South Africa
An anticompetitive business activity known as collusion involves companies cooperating to commit illegal market manipulation in order to increase their profits at the expense of consumers.
Instances of collusion include: In order to keep labor costs low, several high tech companies reach an agreement not to hire one other’s workers. In order to keep prices stable, a number of high-end watch manufactures concur to limit their market output.
Why is collusion forbidden in the economics field?
Conspiracy agreements raise the cost consumers pay for the items because sellers’ competition can lower costs for customers. Because of the harm to consumers, fixing prices by an agreement between producers is prohibited by antitrust rules, thus participants are required to keep the arrangement a secret.
What views does South Africa hold on collusion?
Director and manager involvement in a cartel will result in prison time for the first time in South Africa. Yesterday, Minister Patel announced that the Competition Act modifications, which include criminal liability for cartel activity, will take effect on May 1, 2016.
How are accusations made
A corporation can only be accused with violating the cartel laws if the Competition Tribunal has ruled that it did so, or if it has formally confessed as much in a consent order. Similar to how businesses can currently request forgiveness from the competition authorities, individuals will be able to do the same; however, the criminal courts and the Department of Public Prosecutions would manage the enforcement of this offense, thus immunity may not be sufficient to protect managers from charges brought by the competition authorities.
What steps should businesses and their directors take to safeguard themselves from these heightened risks? Some recommendations are:
the implementation of a program to comply with competition law.
creation of thorough reporting and monitoring procedures to create an early warning system for leniency requests.
An ongoing internal assessment of all contracts and procedures in your company, especially in the setting of trade associations where employees communicate with rivals.
The Competition Commission is making more and more use of search and seizure procedures, including the introduction of training that provides instructions on how to respond in the case of a dawn raid.
Why, given that it is forbidden in South Africa, do oligopolies frequently collude? The cooperation of Oligopolies develop for a variety of reasons, including an attempt to lessen uncertainty, the potential for larger profits, and the ability to control the market by preventing competition.As a result, less consumer surplus is accessible, which lowers individual welfare.
Why do oligopolies conspire frequently?
No single company has a significant degree of market power in an oligopoly. As a result, no company may raise prices above what would be the case in a world of perfect competition. In an oligopoly, all businesses would have to band together in order to raise prices and generate more revenue.
Why consumer harm from collusion?
Consumers suffer when businesses collude. This is due to the price level seen below as a result of earlier discussed collusion among businesses to boost prices.
